PriceAdvantage customer in the news: Barron’s says CST Brands stock could deliver big gains

  • PriceAdvantage customer in the news: Barron’s says CST Brands stock could deliver big gains

    According to an online article on the Barron’s site today, “CST Brands, one of the largest (c-store) operators, could ring up impressive gains for investors….Damian Witkowski, an analyst at Gabelli & Co., puts the private market value of the shares at $48. That’s nearly 50% higher than Tuesday’s close of $32.94. While that valuation gap might not close right away, in the next year the stock could jump 20% as earnings improve.”

    Why is this analyst so bullish on CST Brands? Because of how well CST is managing the balance between fuel margins and volumes. “Since its spinoff from Valero ( VLO ) in May 2013, CST has been boosting fuel margins and opening new larger format stores under its Corner Store moniker…CST has been seeing success from its strategy. As an independent retailer of fuel, CST has been able to focus on improving fuel margins, rather than selling more fuel, as it had when it was part of Valero. In the March quarter, margins jumped 19% to 10 cents per gallon, from the same period a year ago.”

    To what can we attribute this fuel price management success? PriceAdvantage, which CST Brands began implementing in July 2012, finishing the rollout by the end of that year. In the latest earnings report, retail fuel margins before credit card fees were$0.139 per gallon, up from $0.116 per gallon for the same period in 2013. Though volumes were down year over year, something easily attributed to the overall decline of fuel volumes in the industry, I wrote a blog article about the success CST Brands is seeing as they manage the balance between fuel margins and volumes.

    The fuel team at CST Brands is a great partner of Skyline Products, both on the PriceAdvantage side and the Electronic Price Sign side. The CST Brands fuel team has worked closely with the PriceAdvantage team to help us develop the best-in-industry volume, margin, commodity, and competitor analysis interfaces. The benefit to the rest of the industry is that these interfaces are provided as part of the standard set of analysis views available with PriceAdvantage. These views are not custom one-offs that cause problems with future software upgrades – they are standard out-of-the-box features that pose no grief with upgrades.

    We’re proud to work so closely with CST Brands, and look forward to including their ongoing wisdom and insight in future versions of the PriceAdvantage software.


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